Hong Kong's Securities and Futures Commission (SFC) has accelerated its regulatory framework for virtual asset investments, granting approval for the first actively managed virtual digital asset fund. This landmark decision positions Huobi Asset Management (Hong Kong) Limited as the pioneer in this emerging market segment.
Key Developments in Virtual Asset Fund Regulation
The SFC's approval allows Huobi Asset Management to issue three distinct virtual asset funds under the Terms and Conditions for Licensed Corporations Managing Portfolios That Invest in Virtual Assets:
- Bitcoin Tracking Fund
- Ethereum Tracking Fund
- Multi-Strategy Virtual Fund
The funds represent a significant evolution from passive investment products like Canada's Bitcoin ETF to sophisticated active management strategies for digital assets.
Fund Structure and Investment Approach
According to CEO Wu Xuejing, Huobi's current offering includes:
A diversified fund product allocating:
- 90% to balanced traditional funds
- 10% to virtual digital assets
The management team includes seasoned investment professionals collaborating with institutional partners such as:
- Sidney Austin (legal counsel)
- Mourant (fund administration)
- DBS Bank (custodian services)
- Fidelity Digital (digital asset infrastructure)
Regulatory Milestones and Compliance Framework
Huobi Asset Management became:
✅ The second virtual asset manager licensed under Hong Kong's 2019 regulations
✅ The first authorized to issue actively managed virtual asset funds
✅ The pioneer in gaining approval for multi-asset virtual investment strategies
Wu emphasized Huobi's commitment to:
"Transferring our virtual asset expertise to fully regulated entities while advocating for transparency and ethical standards that prioritize client interests across all asset classes—including virtual assets."
Industry Implications and Future Outlook
This approval signals Hong Kong's strategic positioning in the global virtual asset market. Industry observers note that:
👉 Huobi Asset Management could become Hong Kong's equivalent to Grayscale Investments
👉 The SFC is actively creating infrastructure for virtual asset trading
👉 Regulatory challenges remain in monitoring compliance for crypto funds
Wu Xuejing expressed optimism about continued regulatory refinement:
"While we advance these groundbreaking funds, we anticipate ongoing improvements to virtual asset regulatory frameworks."
FAQ: Understanding Hong Kong's Virtual Asset Funds
Q: What makes these funds different from existing crypto products?
A: These represent Hong Kong's first actively managed virtual asset funds with SFC approval, offering professional investment strategies beyond passive tracking.
Q: Can retail investors participate?
A: While details vary by fund, SFC-licensed products typically require investor suitability assessments given virtual assets' volatility.
Q: How does this affect Hong Kong's crypto hub ambitions?
A: The approval demonstrates regulatory progress in establishing Hong Kong as a globally competitive digital asset hub.
Q: What safeguards exist for investors?
A: Funds must comply with SFC requirements including custody arrangements, risk disclosures, and anti-money laundering protocols.
Q: Will more virtual asset funds follow?
A: Market sources indicate several asset managers are preparing similar applications, suggesting growing institutional adoption.
Q: How are the underlying assets stored?
A: Licensed funds use regulated custodians—a crucial security difference from unregulated crypto products.
The virtual asset landscape continues evolving rapidly. For those exploring professional digital asset management, Hong Kong's regulated framework offers new opportunities within a compliance-focused environment.